The acquisition represents a significant step in growing CSR Building Products and consolidates its position as a leading provider of building products inAustralasia

The business is ideally positioned to capitalise on the increasing use of architectural glass in residential and non-residential construction and an increasing focus on energy efficiency

CSR will undertake a refurbishment of Pilkington Australasia’s largest manufacturing plant in Dandenong during FY2008 and FY2009, which will lower the fixed cost base and increase plant capacity

As part of the transaction, CSR has acquired exclusive access to Pilkington glass technology and manufacturing support for Australasia

CSR expects to generate maintainable synergies of at least $20 million per annum by 2010, with approximately 50%achieved in FY2008

The acquisition price is attractive and represents a multiple of 7.9x FY2008maintainable EBITDA (after maintainable synergies and before one-off costs). The acquisition is expected to be earnings per share neutral in FY2008 and positive from FY2009, excluding one-off costs. The benefits of the Dandenong manufacturing plant refurbishment will significantly enhance earnings per share from FY2010

The transaction will initially be 100% debt financed. CSR intends to reintroduce a dividend reinvestment plan (“DRP”) from November 2007, with the FY2008 and FY2009interim and FY2008 final dividends to be underwritten, raising approximately$180 million

CSR has entered into an agreement to acquire Pilkington Group’s leading architectural glass manufacturing and value-added distribution businesses in Australia and New Zealand (“Pilkington Australasia”) for $690 million.Pilkington Australasia is part of the NSG Group of Japan. The acquisition will complete today.

The acquisition is strategically and financially compelling for CSR, is consistent with CSR’s stated growth strategy and is an excellent fit with CSR BuildingProducts.

“The acquisition of Pilkington Australasia is consistent with CSR’s strategy of growing by acquisition and extending our range of products, especially those that improve energy efficiency and thermal and acoustic comfort in new buildings,” CSR Managing Director Jerry Maycock said.

“The business is a leading manufacturer and value added distributor of architectural glass in Australia and New Zealand and is ideally positioned to capitalise on the increasing use of architectural glass in residential and non-residential construction and an increasing focus on energy efficiency.

“The acquisition represents a significant step ingrowing CSR Building Products and strengthens its position as a leading provider of building products in Australasia.

“In addition, the acquisition leverages CSR BuildingProducts’ expertise in manufacturing and driving regulatory change in the building industry and complements CSR Building Products’ existing portfolio of environmentally friendly and energy efficient building products such as Bradford™insulation, Bradcore™ panels,Hebel™ lightweight concrete and Edmonds™ ventilation systems, which significantly improve the energy efficiency of homes and commercial buildings.” Mr Maycock said.

Pilkington Australasia, part of theNSG Group since June 2006, operates three glass manufacturing facilities in Dandenong in Victoria and Ingleburn and Alexandria in New South Wales, producing ~215,000 tonnes of float glass and rolled glass, along with 32 value added distribution sites across Australia andNew Zealand, which undertake cutting, toughening and laminating. The business is the only manufacturer of architectural glass in Australasia and the leading value added glass distributor in Australia with market shares of 60% and 30% respectively. The value added glass distribution market inAustralia is fragmented and CSR believes there are further growth opportunities. Pilkington Australasia also has a 25% share of the value added glass distribution market in New Zealand. The business also operates a small automotive glass processing business in Victoria.

Pilkington Australasia generated revenue of around $400 million in FY2007 and is expected to generate revenue in excess of $430 million in FY2008.

The business is headquartered inMelbourne and employs approximately 1,700 people. The business’ end markets include glass distributors, window fabricators, shower screen and furniture manufacturers,solar panel manufacturers and glaziers.

CSR will undertake a $110 million refurbishment of the Dandenong manufacturing plant commencing in FY2008, which will lower the fixed cost base and increase plant capacity from ~120,000t to ~165,000t.The refurbishment includes a new raw materials batch plant with increased capacity, a furnace upgrade and the installation of a Chemical VapourDeposition (“CVD”) Coater to produce energy efficient “low-e” glass,for which the business received a grant from the Victorian Government. The market for energy efficient “low-e” glass and double-glazing in Australia is currently growing at ~30% per annum and Pilkington Australasia currently has an estimated 80% market share. CSR will be the sole manufacturer of high performance CVD coated float glass in the southern hemisphere and have one of only five Pilkington CVD coated glass facilities in the world. The Dandenong refurbishment project will be managed by Pilkington Building Products (UK) Engineering in conjunction with teams from Pilkington Australasia and CSR.

As part of the transaction, CSR has acquired access to Pilkington glass technology and manufacturing support inAustralasia. Pilkington Australasia will be re-branded under the CSR master brand over the next 9 months and will be managed within CSR Building Products’ Performance Systems Group. The existing Pilkington Australasia management team will be retained, reporting to CSR’s Performance Systems EGM.

The acquisition price of $690 million represents 7.9x FY2008 maintainable EBITDA after maintainable synergies and before one-off costs of around $15 million inFY2008, which will be expensed as significant items. CSR expects to generate maintainable synergies of at least $20 million per annum by FY2010 (of which approximately50% will be achieved in FY2008). The acquisition is expected to be earnings per share neutral in the first year ofCSR ownership (FY2008) and positive thereafter, excluding one-off costs. Further, the benefits of the Dandenong manufacturing plant refurbishment will significantly enhance earnings per share from FY2010.

CSR will initially 100%debt fund the acquisition. CSR intends to reintroduce a DRP from November 2007 with the FY2008 and FY2009 interim andFY2008 final dividends to be underwritten, raising approximately $180 million.

CSR was advised by Goldman Sachs JBWere and Gilbert + Tobin.

Further details regarding the acquisition of Pilkington Australasia are included in a presentation lodged with the Australian Securities Exchange together with this announcement.